Think you Know Who Your Competition Is? Think Again!

In a world where we’re going from industries to arenas, how you define the competitive playing field can either give you an edge or set you back.

If you believe the strategy textbooks, you would think that your primary competition comes from other organizations who do the same thing you do.  This is a dangerous assumption. Instead, consider the concept of a competitive arena, rather than an industry.  An arena represents a set of resources that you need, with different players vying for those resources, each of whom may offer something quite different.  

The various stakeholders – customers, of course, but sometimes other ecosystem partners – all have what Clayton Christensen famously called “jobs to be done.”   So rather than think of customers buying a product or service, think instead of their “hiring” your company to get jobs done in their lives.  When you flip the concept like that, what quickly becomes clear is that the most significant competition you may face isn’t necessarily in your sector or industry at all.  That’s one reason why Netflix talks about competing for every potential minute of your disposable time.  The way they see it, anything you could do that doesn’t involve staring at a screen provided by Netflix is potentially competition – sleep, for instance, is a huge competitor if the battleground is disposable time! 

Leaders who get this right understand that the starting point for strategy is deeply understanding the jobs customers need to get done in their lives and aligning their organizations around these jobs.  For instance, Hubert Joly, the former CEO of Best Buy, used this thinking to accomplish the impossible – making Best Buy a preferred shopping destination for electronics, rather than Amazon and other e-commerce players who use their low overheads and massive purchasing power to win on price.  

A core insight for Best Buy was that nobody actually wants a 42” television.  What they want – the complete job – is for that 42” television to be mounted on a wall, programmed to connect to the cable and Internet, with a remote control that everyone in the family can understand, with access to subscription services, and the list goes on.  By leveraging the talent of the “blue shirts” who work at Best Buy, providing training and making them valuable go-to resources, Joly gave customers a reason to come to the store, and lots of incentives for them to return, purchase after purchase.  Best Buy could battle the e-commerce platforms’ cost advantages by doing for customers what no Internet firm could do.

When you start to think about the arenas you are competing in, the strategic implications can change dramatically.  Weddings, for instance, are a major competitor for young people saving up for a computer or a new car – while the pandemic has put that business on hold for the most part, when we get to the post-pandemic reality, they will be back on the agenda. And when that happens, for young people with lots of friends in the peak marrying years, they could be looking at 5 or more in a year, leaving little in the way of resources for much else.  

Sometimes entire categories struggle or disappear because of arena-based competition.  The game of golf, for instance, is losing a battle for relevance as two-parent working families, the general culture of long hours in the United States, and preferences for more family-focused pastimes dampen enthusiasm for a four or five hour break on the weekend.  

The pandemic, and associated lifestyle changes that favor partial or full-time working from home for large numbers of people can even be thought of as a form of competition.  For instance, the Bureau of Labor Statistics finds that one of the sectors in which employment is plummeting is the apparel business. This is particularly the case for clothing that might traditionally be worn in an office, and all the services (dry cleaning, anyone?) that accompany those.  Will we go back to suits and ties once we go back to whatever the office of the future will be?  Hard to say.

Whatever the future scenarios hold, try to make sure that your strategy is robust to whatever gets thrown at it.  The goal should be preparation and resilience, not prediction – and figuring out who or what you are really competing with is key.

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